Investment in Musical Acts Signing new music acts can be highly speculative. Record producers at music studios have to get budget approval before they sign a new act to a recording deal. Most acts perform a tried and true form of popular music in which
record sales can be pretty well predicted. However, once they get approval for their budgets, why do producers sometimes sign riskier acts who either flop or "break-out" into the next sensation?
This is a moral hazard issue. Record producers are investing other people's money and so have an incentive to switch to riskier investments once the funding has been secured. If the risky act flops, the company loses the money. If it succeeds, they get credit for discovering the new sound.
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The demand curve for a normal good shifts leftward if income ________ or the expected future price ________
A) decreases; falls B) decreases; rises C) increases; falls D) increases; rises
The trade-off between coordinating or not coordinating policies for central banks is measured in terms of
A) inflation and the lowered effectiveness of policies. B) wage inflation and increased effectiveness of policies. C) speculative pressure and intra-marginal adjustments. D) fixed and floating exchange rates.